Mexico’s Credito Real had yet to price an IPO targeting MXP2.8bn ($230m) late Tuesday. The specialist lender is offering 116m shares, assuming a 15% greenshoe, at MXP22.00-MXP26.00 each, meaning a MXP2.78bn transaction if done at the midpoint. About 73% of the deal is planned to be primary shares, with the remainder secondary shares to be sold by investors including Nexxus Capital – the largest holder with 18.3% – and Grupo Kon. Credito Real was aiming to place half the deal in Mexico and half internationally, through this was subject to demand. The bank was aiming to place half the deal in Mexico and half internationally, though this could vary along with demand. Analysts see the price range as suggesting a multiple of 2.5x-2.7x book value, compared to the 3.5x seen by microfinance lender Banco Compartamos. “Credito real operates in a segment that is underpenetrated, like all segments of banking in Mexico. It is also an area that sees high profitability and low levels of non-performing loans,” says a Mexico City-based equity analyst. He identifies some risk in Credito Real’s loan coverage provisions, which could be higher, but notes that payroll-deduction and the other types of lending Credito Real engages in are generally considered safe. Banking in Mexico is also set to continue growing around twice as fast as GDP. Proceeds are for general corporate purposes and for expansion plans. Deutsche Bank and Barclays are managing the international portion, joined by Banorte-Ixe on the domestic tranche. Targeting Mexico’s underbanked lower and middle classes, Credito Real grew by 63% during 2009-2011, and booked revenue of MXP1.0bn in the 12 months to June 30. Founded in 1993, it has funded itself through investment such as Nexxus’, in 2007, and in the local debt markets. Last year it acquired payroll lender Credifel.
Category: Equity
Mexican Building Supplier Plots IPO
Mexican building supply conglomerate Elementia has its eye on an IPO in the medium term, according to local news and wire reports citing remarks from CEO Eduardo Musalem. The intention is unveiled just as Elementia announced the creation of the Cementos Fortaleza cement company. Elementia is 46% owned by Carlos Slim’s Grupo Carso and 54% by Antonio Del Valle, and has focused its fundraising to date on Mexico’s domestic debt market.
RE Specialists Plan Tourism CCD
Hospitality Equity Partners is preparing a certificado de capital de desarrollo (CCD) transaction for Mexico’s domestic market, according to regulatory filings. The 10-year deal of a to be determined size will create a fund investing in tourism real estate assets, both operational and in development, throughout Mexico. The return structure is similar to other CCDs, with investors receiving their initial investment plus a 10% preferred return, with further profits divided 80% to the investors and 20% to the managers. Santander is managing the transaction. Hospitality Equity Partners is an entity formed by Mexican real estate investment shop Real Capital Investment Management and Mexican Tourism advisory specialist Leisure Partners. The timing of the transaction is unclear.
BTG Looks Abroad with RE Fund Reopening
BTG Pactual has launched a follow-on sale of shares in its corporate real estate fund, according to sources following the process, targeting international investors along with Brazilians as it looks to raise BRL2bn ($985m). In what is being billed by the issuer as the first international Brazilian REIT – though it is not technically a REIT – the Fundo de Investimento Imobiliario (FII) BTG Pactual Corporate Office Fund is set to sell 6.2m primary quotas, as the shares are known, and 6.9m secondary quotas. The 144a sale would raise BRL2.01bn if done at Monday’s BRL153.60 closing price. Investor meetings are scheduled to begin today in Brazil, and hit the US next week. The process is expected to close by mid-November. The fund initially raised BRL700m in 2007 and invests in commercial property in Brazil. BTG, Bank of America Merrill Lynch, Bradesco, Credit Suisse and Santander are managing the transaction.
Fast Food Operator to Deregister US Shares
Brazil Fast Food has approved cancellation of the registration of its common stock with the US SEC, it says. The operator of Bob’s and other restaurant brands is aiming to save on accounting, legal and administrative costs. It expects to file next week, and complete the deregistration 90 days later.
Mexican Specialist Lender Set for IPO
Mexico’s Credito Real is scheduled to price an IPO today, targeting around $200m. The sale should test appetite for smaller-cap issuers, seen by many to play a role in Mexico’s forecasted expansion in ECM issuance along with larger trades from the likes of Santander Mexico and Mexichem. The specialist in payroll, group microbusiness and durable goods loans would raise MXP2.43bn ($190m) if the 101m shares priced at the midpoint of the MXP22.00-MXP26.00 range. A 15% greenshoe is also possible. About 73% of the deal is planned to be primary shares, with the remainder secondary shares to be sold by investors including Nexxus Capital – the largest holder with 18.3% – and Grupo Kon. The bank was aiming to place half the deal in Mexico and half internationally. Proceeds are for general corporate purposes and for expansion plans. Deutsche Bank and Barclays are managing the international portion, joined by Banorte-Ixe on the domestic tranche.
La Polar Hits Target
Chile’s La Polar has raised CLP127bn ($269m) through an equity offering closed last week, it says, topping a CLP120bn goal. The retailer has sold 720m shares, with pricing set as the average price of the three days prior to the buyer’s subscription minus a 5% discount. The shares closed at CLP208.33 Friday. The offer raises funds to remodel stores in Chile and to expand in Colombia, and is done as part of a $900m restructuring agreement with creditors. The retailer set aside nearly $1bn-equivalent in loan loss provisions last year amid accusations of fraud after the company arbitrarily overcharged its credit clients. Celfin is managing the capital raise, and Lazard is the advisor on the restructuring.
Sonda Advances Follow-on
Chile’s Sonda is preparing a roadshow for an equity follow-on, according to sources familiar with the process. The information technology firm, which was approved for a CLP150bn ($317m) equity capital raise in August, is hoping to execute by the end of the year. It plans to first visit investors in LatAm, North America and Europe, in a process managed by BTG Pactual and Goldman Sachs. The proceeds will help fund a $700m 2013-2015 expansion plan. About $200m of the plan is to be organic, and $500m should come through acquisitions. It is targeting growth outside Chile, specifically in Brazil Mexico and Colombia. The company would use equity to fund about 40% of the plan, with 40% coming from cash and the remainder from debt. Sonda has been a consistent acquirer in the region, most recently taking Brazil’s Euclid for $73m in May and Chilean rival Quintec last year for $61m. It has a presence in Chile, Brazil, Argentina, Colombia, Costa Rica, Ecuador, Mexico and Uruguay. Sonda shares closed at CLP1,463.70 Friday.
Duratex Launches Tablemac Tender
Brazil’s Duratex has launched an offer to buy up to 12% of the publicly traded shares of Colombia’s Tablemac, it says. As part of its plan to eventually obtain as much as 52% of the industrial wood panels specialist, it will look to spend as much as COP48.72bn ($27m) to buy up to 4.06bn shares at COP12.00 each, it says. The offer will take place October 17-30, with allocations November 1. In May Duratex agreed to buy 25% of the Tablemac for $56m, at the same price. Under the agreement in May, Duratex can, within the next 2 years, opt to buy another 15% at the same per-share price adjusted by an annual rate of 6.25%.
Mexichem Clinches Well-bid Equity Sale
Mexichem has priced a MXP15.6bn ($1.21bn) follow-on equity offering, coming at a 2.9% discount and drawing 4x demand. The industrial conglomerate priced 260m shares, assuming a 15% greenshoe is used, at MXP60.00 each, according to sources familiar with the sale. The level compares to Tuesday’s MXP61.82 closing price. About 60% of the tranche was expected to be allocated to international investors, and 40% to Mexican-based buyers. The strong international bid suggests investors are still keen to get their hands on Mexican assets, even as they become more sensitive to high valuations in the country. Including the greenshoe, the all-primary deal represents 12.4% of the company’s shares. Mexichem is raising funds for general corporate purposes, including expansion projects and working capital. Citi, HSBC, JPMorgan and Morgan Stanley managed the international portion of the transaction, joined by BBVA on the Mexican portion. The sale follows a $1.15bn international bond sale last month drawing 17x demand, as Mexichem continues to raise funds following the $500m acquisition of Dutch pipe maker Wavin. The deal is Mexico’s largest follow-on since Cemex’s $1.87bn sale in 2009, according to Dealogic data. Credito Real is set to finish what should be the most active four weeks of Mexican equity issuance in recent memory, with an IPO expected to raise $200m-equivalent scheduled for October 16.